Transcript: Entrepreneurial Equity – The Washington Post

Transcript: Entrepreneurial Equity – The Washington Post

MR. RYAN: Well, good morning, everyone. Welcome to Washington Post Live. I’m Fred Ryan, publisher and CEO of The Washington Post, and we’re delighted to have you with us this morning.

In the past decade, there’s been substantial economic growth among minority‑owned businesses, but substantial challenges remain, especially for female founders who secured only 2.3 percent of venture capital funding in 2020.

Well, we’re delighted today to have several guests join us on the stage for conversations about entrepreneurial equity, including the perspective of small business owners and the administrator of the SBA.

First, we’re going to hear from the co‑founders and sisters behind Havenly, an online interior design resource, and they’ll be interviewed by our senior critic‑at‑large and interior design enthusiast and I should mention Pulitzer Prize winner, Robin Givhan.

Then we’ll hear from Isabela Casillas Guzman, the administrator of the Small Business Administration, and she’ll join Leigh Ann Caldwell, who’s co‑author of the Early 202 as well as anchor of Washington Post Live, and they’ll have a conversation about the government’s role in supporting all entrepreneurs.

I’d like to begin by thanking today’s presenting sponsor, Wells Fargo. We’ll hear from them later in the program when Third Way president Jonathan Cowan talks with Wells Fargo & Company CEO and president Charlie Scharf; Marc Morial, president and CEO of the National Urban League; and Sheila Johnson, a great entrepreneur and co‑founder of BET and Salamander Hotels.

We’ll have a brief video, and then you’ll be joined by my colleague, Robin Givhan, to start the program. Thank you for joining us today.

MS. GIVHAN: Good morning, and welcome to Washington Post Live. I’m Robin Givhan, senior critic‑at‑large, and my guests on the stage today are the co‑founders of Havenly. It’s the online interior design resource, and as Fred mentioned, I have a deep love and affection for interior design. So I’m really delighted to have today on the stage, Emily Lancaster to my far left and Lee Mayer. Welcome to Washington Post.

MS. MAYER: Thank you for having us.

MS. GIVHAN: I think as everyone is always curious to know about the origin story, so if you can tell us what sparked the idea for an online resource like this.

MS. MAYER: Well, you should jump in, but I think‑‑I think home has been a large part of us growing up. We actually grew up in the area, and home has always‑‑

MS. GIVHAN: Wait. Can I ask you to pause one second?

MS. GIVHAN: Because I know your parents are in the audience, and parents always need like, you know‑‑

MS. MAYER: Are they here? They might have also gotten stuck in the‑‑that nasty traffic that I was just stuck in. So they will come here soon.

MS. MAYER: And I will happily embarrass them.

MS. GIVHAN: We’ll give them a shout‑out.

MS. MAYER: But home is very important to us, and I think, you know, the spaces that we sort of grew up in were very central to sort of our family’s life. And I think as we became adults‑‑so we are six years apart. I’m actually six years older than Emily, so now you know.

MS. MOTAYED LANCASTER: I didn’t say it.

MS. MAYER: But as we‑‑as Emily graduated from high school‑‑or from college and I graduated from business school, we started to talk about different ideas, and Emily is the entrepreneurial one. So I’m like the stuck‑in‑the‑mud, like low‑risk‑taking person, but Em had started a couple other companies. And we were kind of talking about how we wanted to decorate our homes, and I think at some point, we were sort of like how is it possible that no one exists out there that is making this service accessible to people like us. And by people like us, I mean people that didn’t have tens of thousands of dollars to spend on design services. That was really just out of‑‑out of what we could afford at the time, and that’s really, I think, how we got started.

MS. MOTAYED LANCASTER: Yeah. I mean, and this was about 10 years ago. So it was really‑‑it was crazy to us that, you know, nothing like this existed, right? You couldn’t go online to‑‑you have Pinterest and you had all these other services, but no real service or website allowed you to take your inspiration and really work with someone all digitally, all virtually to kind of design your space. And really, the concept of the business came from a personal need, and, you know, from there, even though there have been different iterations of the business and, you know, we’ve changed, some tweaks, but the real thesis is there that you can design your space virtually and buy all the furniture in one place and go from there.

MS. GIVHAN: When you said so much of it came from your own needs and desires, I mean, how much research did you do to find out if there really were other people who were wanting this or if you guys were just, you know, part of a very small group? I mean, how did that‑‑how much research did you do to find out what the true need really was?

MS. MOTAYED LANCASTER: Sure. No, that’s a great question. I think‑‑and I don’t know if you remember this, but we always tested out a‑‑tested out the concept, right? So, even before we built the website or built the platform, remember we would email people links and have them purchase through us.

MS. MAYER: We did a survey too.

MS. MOTAYED LANCASTER: Yeah. We did some surveys, and you’d kind of beta‑test the concept‑‑

MS. MOTAYED LANCASTER: ‑‑just to make sure that there is proof of concept before going all in. But, yeah, I mean, I think that’s the first way that we kind of started to dig into it, and then as we started to build the platform, as we started to build the service, you get so many more learnings. And you can tweak, you know, the concept and tweak the service from there as well.

MS. GIVHAN: So, essentially, you were looking to start a family business, and what was the dynamic like? I mean, I always think about, for instance, in other sort of creative industries, there’s sort of the creative mind, and then there’s the business mind. Did you divide and conquer in that way, or did you both sort of do left brain/right brain?

MS. MAYER: That’s a great question. I think, you know, so I don’t know that we intended to start a family business. I think we always wanted to like start a business that was growing. We just ended up starting it with each other‑‑


MS. MAYER: ‑‑if that makes sense, so it’s like‑‑but, you know, it sort of wasn’t what I had expected necessarily.

I think what’s interesting is we’re both really similar. So it was actually, in some ways, we had to bring on other people to do the things that we’re not really great at. Like, neither of us are really great at, like, detail orientation. She’s maybe better at it than I am, but, like, to be perfectly honest, to get the t’s crossed and the i’s dotted‑‑and we needed to bring on someone else. And then we kind of split up the work a little bit, like, internally versus externally, and it kind of switched based on where we were in our lives.

So, you know, it kind of worked out that way, but it’s really funny. We were like‑‑one of the weird things is when you start‑‑when you start something with someone that’s really similar to you, it can be really great because you move faster. You can like sort of shortcut certain things.

MS. GIVHAN: You have a shorthand.

MS. MAYER: Yeah. But what’s really actually hard is you end up missing things, right? So, like, because we think about things the same way, you potentially aren’t able to surround an issue with as much sort of diversity of thought as you would want, I think, when you’re starting something new.

MS. GIVHAN: So I’m presuming that you aren’t gazillionaires starting‑‑when you started the business.

MS. MAYER: I wish I had been.

MS. GIVHAN: Now you’re gazillionaires.

MS. MAYER: I also wish I was.

MS. GIVHAN: But, I mean, what was the process like for raising capital? I mean, did you have the so‑called, you know, elevator pitch? I mean, what did you say to potential investors? How did you find potential investors?

MS. MAYER: Yeah, that’s a great question.

So I will say we’ve raised nearly $100 million in venture capital funding to date. That first million was by far the hardest, and I think, you know, there were two parts of that. Part of it was we were new to it, right? So, you know, we’d never really done it before. All of the content you see now around how to build elevator pitches and how to build pitch decks was sort of in its earliest days when we were raising fundraising, and I think it was, like, just figuring out how to put together a pitch deck and how to connect a pitch meeting with a VC was so foreign to us. So there was a lot of it that was just us, you know, kind of getting used to raising funding.

MS. GIVHAN: How do you even get a meeting? How do you get in front of the right people?

MS. MOTAYED LANCASTER: I mean, you have to ask. Yeah.

MS. MAYER: You just [unclear].

MS. GIVHAN: As simple as that.

MS. MOTAYED LANCASTER: Yeah. I mean, you know, we did a‑‑and I still do a lot of cold LinkedIn messaging, a lot of, you know, stalking to figure out what the email is. I mean, you just got‑‑you have to ask, right? And out of a hundred, you know, no responses, you might get one person, you know, who takes an interest or something along those lines.

And then also for us‑‑and I do this with my current business. I have another business that has not raised a ton of venture capital. We are mainly friends and family and angel investing, but with that, you know, you ask your network and you ask your connections, and, you know, this person might introduce you to this person who might know‑‑you know, it’s a lot of that.

But I think, you know, the first thing I’ll say is don’t be, I guess, embarrassed or anything along those lines. You just have to ask and see where, you know, those connections might take you.

MS. GIVHAN: And did you‑‑how long did it take you to sort of hone down exactly the clear succinct description of what Havenly was going to be?

MS. MAYER: You know, I think we still work on it. So every time you fundraise, there are kind of two pieces to fundraising. There is your company and how you’re doing, and then there is the market. And those two things‑‑and those two things have to kind of come into alignment.

So a good example is when we were first fundraising, Uber was, like, sort of taking off.

MS. MAYER: So 2015 is when we raised our seed round funding, and so we were also this marketplace model, right, where we have contractors who work for us as designers. And so we were able to sort of tailor a pitch that spoke to and reflected upon the success of another company that had a similar model.

Now, this last year when you fundraise, it was like a totally different sort of perspective, and the market had a different pitch that they were receptive to. And so each time you go out and you fundraise‑‑and sometimes even for each type of investor or flavor of investor‑‑you’re tweaking a little bit here and there to make sure that what you do is communicated in the best way for them to hear and receive it. And so, you know, I think, unfortunately, it’s not like you said it and you forget it.

MS. MAYER: There’s a lot of, like, work involved both before and after a pitch to try and get better and better at every meeting and every sort of subsequent partner meeting, et cetera.

MS. GIVHAN: I mean, we always talk about the challenges that women and minorities face in becoming entrepreneurs, in raising capital. Was that something that was really evident as you were going about this, or was it something that was more subtle? And, also, the field that you were choosing, interior design‑‑

MS. GIVHAN: ‑‑is one of those sort of soft fields, so to speak. I mean, did that make raising capital or just convincing people of the possible success more difficult?

MS. MAYER: I mean, I think‑‑I’d be curious to hear your perspective, Emily, but I think, you know, one of the hardest parts about some of this in these questions is, like, I’ve only experienced this as me.

MS. GIVHAN: As yourself. Yeah.

MS. MAYER: Right. And so‑‑and so was it hard? Yes, but it’s hard for everyone. And, you know, sometimes you experience things where things are a little more pointed. So whether it’s because of the industry we’re in or because I’m a woman or because, you know, I look a little different from, you know, the majority of people that raise funding‑‑and you get this, like, sneaking suspicion that that might be it in individual meetings.

But what I still say is you see the numbers, and you sort of understand them, right? Like, I see the numbers. I think‑‑I think it was just mentioned. 2.3 percent of venture capital dollars went to women in 2020. It actually came down in 2021. I believe it was 2 percent‑‑

MS. MAYER: ‑‑in the early estimations. So, you know, we’re not really making a ton of progress, and you can kind of see why. It’s a very subjective process, and so, you know‑‑and there’s no data. It’s not like I come in with years and years of operating data. I come in with a pitch.

MS. MAYER: And so they have, you know‑‑and an investor really has nothing else to judge me on than the person in front of them, and of course, it becomes subjective, and of course, maybe, you know, biases sort of sneak in. But, again, it’s really, I think, in some ways tough to tell.

I’m curious about your perspective because Nurture&, which is my sister’s company now‑‑


MS. MAYER: ‑‑you have a male co‑founder.

MS. MOTAYED LANCASTER: I do. I have a male co‑founder, and what Nurture& does is we do nursery furniture and furniture for baby and kids, and‑‑

MS. GIVHAN: Which you launched during the pandemic.

MS. MOTAYED LANCASTER: Which we launched during the pandemic in June of 2020.

And it is interesting, I think, to your point about, you know, you don’t have this massive track record when you’re going and pitching folks or things along those lines, but one of the things that I do is you just got to prove‑‑you know, we have two years of business‑‑or for Havenly even longer, but we know the numbers, and we know our margins, and we know what makes sense. And putting those hard numbers in front of folks that you’re kind of pitching to is one way that I combat the‑‑you know, the “Oh, but you’re in a soft, you know, industry,” or something along those lines. That’s one way I try to prove, oh, this might sound like a feminine industry or something along those lines, but look at these massive numbers, and look at this market size. And look at what we’ve‑‑what we’ve been able to do with our limited cash and things along those lines.

But, yeah, I mean, I think we’ll see what happens with venture financing, those numbers and stats in the future, but it is really an interesting process. But it’s the only one we know.

MS. GIVHAN: Was there ever‑‑I mean, how often would you go into a room and be presenting to people who look like you, other women, other people of color?

MS. MAYER: Back then? I mean, back then, almost never.


MS. MAYER: I don’t think I pitched‑‑I might have pitched women. I don’t think we pitched women in our seed round.

Back then in 2014‑‑so there was a little bit of a reckoning in venture capital around at least gender in 2017 for a variety of reasons, but before then, it was really unlikely. Sometimes you’d get women as associates, like the‑‑you know, kind of the more junior individuals, but typically, I remember for a seed round when you’d walk into the partner meeting, which is, like, kind of the final. It’s they’re held on Monday. It’s like the final meeting where you pitch everyone. It was not uncommon to look across the room and see only Caucasian men.

MS. MOTAYED LANCASTER: Especially out West, especially in California.

MS. MAYER: Yeah. In San Francisco, it was way worse than New York, which was another sort of base of our capital.

And I don’t‑‑I don’t exactly know why that is. I think it was just a very weird thing because‑‑so an example I always give is oftentimes, at the time, the male venture capital partner that I would be pitching to would say something like, “Oh, I don’t know. Let me ask my wife,” and I always thought that was super weird. Like, you’re a professional investor. Like, when you invest in health care, do you say, oh, I don’t know, let me ask like, you know, the person in the hospital down the street? No. You, like‑‑you, like, make‑‑you use your judgment and your years of investing, and you think about the pieces that we’re bringing you and the numbers that we’re bringing you, and you’re supposed to make a call. It’s not like, oh, let me ask my wife. Like, that is so reductive, A to your wife and B to me.

MS. MAYER: Like, you know what I mean? Like, oh, your wife could talk about interior design, but she can’t, like, opine on the enterprise company you were just investing.

MS. GIVHAN: Right, right.

MS. MAYER: And, you know, that kind of thing kind of, like, drove me up the wall.

But, again, it wasn’t‑‑it wasn’t intentional. Like, there were some things that were intentional that‑‑and, you know, I thought were abhorrent behavior, but putting that to the side, what’s interesting is, like, that individual never thought of it as, like, sexist.

MS. MAYER: And he never thought about what it said about, you know, gender and also his marriage and, like, how he thought, you know‑‑

MS. GIVHAN: What popped into my head is one of those, like, 1950s ads‑‑

MS. GIVHAN: ‑‑for like a washing machine being pitched‑‑

MS. GIVHAN: ‑‑to, like, the sweet homemaker.


MS. MAYER: Yeah. But how many times did‑‑I feel like we heard that all the time.

MS. MOTAYED LANCASTER: It’s just the structure and the systems that are in place‑‑

MS. MOTAYED LANCASTER: ‑‑and, you know, again, like Lee mentioned, no one ever thought‑‑you know, no one ever thought of that in a rude manner, but it’s just, you know, an offhand column that really conveys the structures and the‑‑you know, the processes that are in place that make it difficult for women entrepreneurs.

MS. GIVHAN: Does that suggest to you that there’s a huge percentage of the decisions are based on sort of just gut reaction as opposed to the actual numbers that are being placed in front of him‑‑

MS. MOTAYED LANCASTER: Well, that was‑‑

MS. GIVHAN: ‑‑as if he didn’t trust‑‑


MS. GIVHAN: ‑‑his gut on‑‑


MS. GIVHAN: ‑‑this topic?

MS. MOTAYED LANCASTER: But when you hear that first check in because you’re such an earlier business, a lot of‑‑you know, a lot of the decision‑making is based on gut, call it, right? And‑‑

MS. MAYER: Or it’s more qualitative, right?

MS. MOTAYED LANCASTER: Yeah, more qualitative.

MS. MAYER: Because, like, again, your first check‑‑so our last round was a far more‑‑you know, like, again, we’ve got years and years of operating history. You know, I barely had to do any‑‑I mean, it was tough to raise in some ways, but, like, you know, the numbers speak for themselves.


MS. MAYER: Before you have anything, of course, I guess, it’s subjective because what else‑‑you know, what else do they have? And, to some degree, I understand that.

I think‑‑I think when we talk about equity, though, what we hope for is something of an even playing field in that subjective evaluation of my business.

MS. GIVHAN: Mm‑hmm, mm‑hmm.

MS. MAYER: And I think it’s‑‑you know, it can be tougher, I think, sometimes when either you’re in a category that feels less‑‑that feels a little softer, to your point‑‑

MS. MAYER: ‑‑or you potentially don’t have for whatever reason sort of a connection, whether it’s by demographics or something else, to the person that you’re talking to.

But, you know, I think to some degree, like, it’s‑‑the thing that I struggle with sometimes in these conversations is I never want a woman or a person of color or anyone else that’s underrepresented to feel like this can’t‑‑they can’t do this, right? It can be done. You know, you do have to think differently potentially about how you pitch or who you pitch, but it’s totally, you know, doable. It’s just harder.

MS. GIVHAN: Well, that kind of leads me to my next question, which is, you know, recently, Kim Kardashian announced that she was starting a private equity firm. Serena Williams has talked a lot about‑‑now that she has evolved away from tennis, that she wants to focus on venture capital. I mean, how important is it to have women, faces like that in that space on the other side of the pitch?

MS. MOTAYED LANCASTER: Oh, I mean, incredibly, incredibly important, and all the strides that are being made and these big names really bring attention to it. But, also, there are many unnamed women out there who are either angel investing or starting their own funds or SPVs and things along those lines, and this just is a snowball effect of having, you know, that type of diversity on the investment side, which is great.

You know, I think one of the things that’s really exciting to see is definitely some of these institutional funds like Kim Kardashian’s and Serena’s and some other folks, but also, you know, I would say angel investors and women who are just becoming more literate and, you know, investing in start‑ups or things along those lines. There is so much education out there. There is so much access to that education now with, you know, what you guys are doing and free education in that sense, which I think is just really exciting because that means that those people will be investing in different businesses that, you know, the traditional venture capital person might not be interested in, right? So I think that’s really exciting.

For example, for Nurture&, our cap table is all angels and a ton of women. My sister invested, right? So being able to have that access to capital, which is, you know, a little bit different than the traditional VC route is just‑‑it’s just going to make those pathways for entrepreneurs like us that much easier.

MS. MAYER: It definitely‑‑I mean, one of the interesting things for consumer businesses, the vast majority of consumer decisions in this country are made by typically women or people who identify as women, and I think one of the‑‑and the consumer part of our economy is a fairly large part of our economy. And I think one of the interesting things is, like, so much of what you need to do when you build a consumer company is connect with your audience, and if your investor doesn’t understand that, you know, you’re really sort of misaligned to begin with. And so the more women‑‑and generally, diversity you have around your cap table or at least around your businesses, it allows you to sort of, again, meet your audience where they are. So, you know, having some sort of a reflection of your consumer base on your cap table or on your board, I think, is just a really important thing.

MS. GIVHAN: I mean, it feels like this conversation has really sort of taken on new urgency in the last‑‑you know, the last few years. I mean, can you point to anything that has really sort of lit a fire underneath the conversation to really sort of bring it to a boil and force people to start considering these issues, or has it just been, do you think, sort of a slow, steady progression?

MS. MAYER: I think‑‑so in‑‑so 2017 was the sort of #MeToo year, if you remember that, and it happened actually very‑‑

MS. GIVHAN: Oh, I do remember.

MS. MAYER: Yeah, I figured you would.

MS. MAYER: It was hard to miss.

But I think in the venture capital industry, they had sort of a separate and earlier reckoning for a variety of reasons, and actually, Havenly‑‑and a board member of Havenly’s was involved in an interesting way. And so we kind of got to see the conversation really go from “Oh, yeah, we should work on this at some point in time,” like “Wouldn’t it be cool if we had more chicks around the table?” to like, “Gosh, we really should pay attention to these women that make up 51 percent of our population and make 85 percent of consumer decisions. And I think that that was a moment.

The weird part is, like, the numbers started to tick up, and then the pandemic hit, and then they kind of came back down. And it’s been this, like, stub‑‑that line of like 2 to 3 percent of dollars going to women really hasn’t changed much.

MS. MAYER: And I think that that’s been a real point of frustration for, you know, a lot of us in this space, not just as women, but, you know, it’s the same for, by the way, Black founders and brown founders. Like, a really stubborn, sort of low single‑digit percentage of dollars is really going to those individuals, which is like hard. And, you know, I’m not entirely sure what to necessarily do about it, apart from, you know, continuing to call attention to it.

MS. GIVHAN: Well, also, the topic of building relationships, which is clearly enormous‑‑

MS. GIVHAN: ‑‑as entrepreneurs. I mean, how do you‑‑how did you create a network of people that you can turn to, whether it’s angel investors or people who can perhaps offer guidance, connect you to someone else? Are you just like the queen of LinkedIn?

MS. MAYER: [Pointing at Ms. Motayed Lancaster] You are.

MS. MOTAYED LANCASTER: I do a lot of LinkedIn stalking, but, no, I mean, I think in the past few years, there are people that look like us or, you know, women, young females that are getting more interested in this and being able to create and find that community of like‑minded folks so that, you know, you’re able to ask for those connections and introductions is I think really paramount.

And, you know, for us, I think we both went to education, you know, schools and things along those lines and being able to tap into those networks. But, honestly, I think just asking everybody, talking to every single person, meeting someone in the elevator and saying, “Hey, I do that,” you never know what might come out of it, which I know is like a very, you know, basic answer, but I would attribute a lot of the connections I had made or a lot of the folks that I met to that.

And then the one thing I will say is‑‑and I’d love to hear your take on this, Lee. But a traditional venture capital firm has partners and then a few levels and then call in an associate, right? And, usually, like Lee had mentioned, a lot of those associates, you see a little bit more‑‑you see more women, but it’s very hard to get promoted to that partner level. And, you know, it takes years upon years and your own financial capabilities and whatnot, and so what I think is really interesting is I’ve been seeing more women just start off and spin off and create their own funds and create, you know, their smaller seed funds or things along those lines.

And what’s really exciting for me as an entrepreneur is those are the people I want to talk to first, right, the people who aren’t part of that, you know, old‑school institutional structure who might be spinning off and doing their own thing, and they’re entrepreneurs in their own right even though, you know, they’re on the investing side. So that is one place that I always look to when I’m fundraising is what are the newer funds that might have someone who’s potentially my age or a female or, you know, Black or Latinx or something like that to really turn to because, you know, I want to support them as well, and that’s a really organic, great conversation that you can have.

MS. GIVHAN: I would love to squeeze in an audience question before we have to go because our time is running down, and it’s‑‑let’s see. Georgia from D.C. asks, “What are the best ways to advocate for BIPOC businesses?”

MS. MAYER: I think there are kind of, you know, two ways of thinking about this. So there is advocating for yourself and, you know, in order to do that, you have to do a lot of the things that we just heard and discussed, so refine your pitch, make sure you know your numbers.

And I think, again, whatever you need to feel confident in presenting your business in the best light is sort of helpful to prepare and then prepare again, and it’s really‑‑like, for me, that was actually a really helpful thing to sort of get my own advocacy going for myself was like if I felt nervous, spend a lot of time on preparation, and it kind of helped me arm myself with sort of the best pitch for my business.

But the problem is, I think‑‑and this is what we’ve sort of been discussing is it’s not, unfortunately, just me. I have to be met by the market, and so I think one of the things that’s very helpful also is finding people to advocate for you. Who do you know in your network that can help you meet the person that might invest in you, that can help sort of circle back to that investor that you just pitched and talk about how great you are? Who are the bosses you’ve worked for? Who are the coworkers and colleagues you know, the people you went to school with? Assembling people around you that can really celebrate you to other people is a huge part of helping. I think all of us do as well as we can, but in particular, if you fall into an underrepresented category, it’s that important to kind of get it going.

I think the other thing is just find a cohort of people that you feel comfortable talking to that are kind of at the same stage you are at. It’s been like a lifesaver for me as an entrepreneur, whether it’s other women who are fundraising at the same stage or even frankly other entrepreneurs, period. It’s a tough road. Just having a place to kind of vent but also find some solidarity and help is a very, very impactful thing.

MS. GIVHAN: Well, I think we’re going to have to leave it there. That’s terrific advice, and I encourage you all to go to Even if you’re not interior design obsessives‑‑

MS. GIVHAN: ‑‑it will make you into one.

MS. MAYER: It will make you into one.

MS. GIVHAN: So our program will continue after this brief video. Please stay with us.

MR. COWAN: Good morning, everyone. I’m Jon Cowan. I’m the CEO of Third Way, and I’m thrilled that we are having this conversation today because there is a massive void in the debate here in Washington.

The economy, of course, is a top‑of‑mind issue, and there is a large focus among policymakers about what is ailing capitalism. Everyone likes to focus on the famed 1 percent, and to be fair, income inequality is real and serious. And the wealth gap, especially the racial wealth gap, is a massive problem.

But there is also a different issue that gets far less attention than it deserves. I call it the “2 percent problem.” That’s because only 2 percent of businesses with employees are Black‑owned, 2 percent. Only 6 percent are Hispanic‑owned, and only 10 percent are Asian‑owned. When you break it down by gender, men own three times the number of small businesses than women. We are never going to fundamentally address the wealth gap in this country and fix capitalism if we don’t address the barriers standing in the way of women and people of color. Entrepreneurship must play a central role in that, but it is not part of the national conversation nearly to the scale it must be. We are setting out to change that.

I am thrilled my friend Marc Morial is here.

MR. COWAN: Marc is the CEO of the National Urban League, and I called him last year to say we wanted to build a new effort called the Alliance for Entrepreneurial Equity. We wanted to change the conversation and drive a new federal agenda. Marc said he didn’t want to just help; he wanted to run the effort together. And our first partner to come on board was Wells Fargo, thanks to their CEO Charlie’s vision and leadership. And I’m also thrilled we’re joined this morning by Sheila Johnson, who brings a wealth of experience on these issues from her time as co‑founder of BET, current CEO of Salamander Resorts and Hotels, and a host of other endeavors.

So let’s dive in with this amazing, smart panel and start talking about the problem of entrepreneurial inequity in America.

Charlie, let’s start with you. The last couple years were especially challenging for diverse entrepreneurs and small businesses. What insights do you have from working with so many small businesses during the pandemic?

MR. SCHARF: Sure. Well, Jon, thank you very much, and thank you for the opportunity to be here with all of you.

You know, I think the groundwork you laid in your opening comments is just incredibly important to just stop for a second and process, which is you do‑‑before you can tackle any problem, you have to be clear what the problem is and acknowledge that there is a problem. Diverse‑owned small businesses, as you pointed out, are just a fraction of what they should be. It’s often harder for diverse‑owned small businesses to get the resources that they need, either to start up themselves or to stay in business or to grow, and, you know, this period that we’ve gone through over the last couple of years with covid has just accentuated that. And I think we at Wells have had the opportunity to learn a tremendous amount, partially through PPP but partially through a program that we enacted after PPP called “Open for Business.”

And if you just reflect on PPP for a second, the idea behind PPP was extraordinarily important to step in and help small businesses broadly, certainly were pluses and minuses of it, and there’s no question, it was extremely helpful to continue to help the engine of small businesses generally across the country.

But the other side of that is when you look at who is able to access PPP, what was required, what requirements the banks had, how we were trying to get as many people through the funnel at once is very often those who were most in need, which was the diverse small businesses, were the ones not able to access the system. And so, you know, we can talk about the fact that we focused on smaller small businesses and we funded $14 billion of loans and helped 250,000 small businesses, but the reality is there were still a huge amount of small businesses that were still hurting. And that became very clear in conversations that we had with groups like Marc’s and with CDFIs that we had relationships across the country.

And so we went down this path of saying, okay, let’s figure out how we can help, both learn and get access to a broader population, take the fees that we made in PPP, $420 million, and work with partners that knew those diverse‑owned small businesses, had relationships in ways that we didn’t, and through that, I had the opportunity to travel around the country and to meet many of them. And what you realize is just, well, number one, is how important the resources that we were able to provide meant, not just to them but to the communities in which they operate. When you have a chance to travel around to the cities and communities, you see helping an individual small business is helping that community. It’s someone that’s providing goods or providing services. It’s employment. It’s a place for people to gather, and that feeds on itself.

And our system is just not set up to support diverse small businesses, very similar to the issue that we have on the consumer side. And, you know, just from a bank’s perspective, the way we think about providing credit to small businesses, when someone wants to start something, so much of it has to do with the fact that we have to look at them as an individual, and there are inequities that exist in how we look at individual credit driven by‑‑you know, the biggest one is credit scores because things like rent payments and things like that aren’t part of it. And so there is a very, very broad problem that exists.

But I think the most important thing that I took away from this exercise that we went through is that we can make a difference. There are ways to access the community, but you need to partner with people, and you need to come together and make sure you’re clear on who you’re trying to get the resources to.

MR. COWAN: Charlie talked a lot about kind of the last few years and how all of this was heightened and highlighted and exacerbated by the pandemic, but you’ve been working to deal with the barriers facing people of color and women entrepreneurs for a long time now. What do you see as the biggest problems out there that you’ve encountered? Sheila.

MR. COWAN: Yes, it was you.

MR. COWAN: I’ll get to Marc in a moment, but you’re first.

MS. JOHNSON: Well, I’m going to start back. I’m the third act of my life in starting a business.

MR. COWAN: We should all be so lucky, right?

MR. COWAN: But, anyway, even myself, after selling BET, I had a lot of money on my hands, and the problem is‑‑and we’re going to talk about the elephant in the room in here‑‑we don’t get the respect. Women do not get the respect from banks.

And I remember going to a bank and I said, “I really would like you to handle my money,” and they didn’t take me seriously. So, you know, I moved my money to another bank. I won’t tell you which. It wasn’t Wells Fargo.

MR. SCHARF: Can you bring it to us, though?

MS. JOHNSON: So I did‑‑

MR. COWAN: I think you’ll have a lot of banks calling you after this session.

MS. JOHNSON: Oh. Well, anyway‑‑but the problem that I realized right away is women are just not on the table here. They do not take us seriously. It’s very hard for women because we don’t have the track record in a business, and it’s‑‑I think it’s really, really hard.

And so, even with my money, when I decided to build my first resort, you know, men don’t use their money. They get investors in there. I could not get an investor because I didn’t have the track record. So I had to use quite a bit of my money to start building the track record, and a lot of women do not have that, you know. They just can’t do it.

So I built the track record. I mean, we’ve got seven hotels now, but it is really, really difficult. And one thing that I did learn‑‑and I’ve put a lot of kids through school and especially women‑‑I said so many women fail in the very beginning, and there’s one really basic fact. They do not talk to the family. The family, they have to have that support system to really communicate with them how they’re going to build their business, why they want to build this business, and I’ve seen too many women fail because they do not have that support. Okay.

And then there’s steps. They have to find a good lawyer. They’ve got to get a good CFO. There are so many steps that are right there that they have got to really set up before they even do it.

So, you know, I’m listening to you, and I know it’s out there. I know the steps that I’ve had to go through, but I did not have that support. And I had to build a team around me that really understood my vision, and they didn’t come in with their own vision. You got to make sure that you build a support network around you that really understands not only who you are but what your goals are going to be.

MR. COWAN: So, Marc, you all at the National Urban League run, I think, 13 entrepreneurship centers around the country. So a lot of the people who are like Sheila when she started out come through your centers, and I also know that economic empowerment is a personal and professional passion for you. So what do you do for the folks who come through your entrepreneurship centers? What barriers do they face, and how do you help them overcome the kind of barrier Sheila just described?

MR. MORIAL: Well, I want to thank you and The Washington Post. I certainly want to thank Sheila who is a shero for so many of us and Charlie for his partnership and for his leadership.

At this moment, with our 13 entrepreneurship centers and our some‑14,000 small businesses, we are working to help them think ahead. So what does thinking ahead mean?

Our work with the Alliance for Entrepreneurial Equity has a focus on public policy insofar as it relates to entrepreneurial equity. There have been a number of things that have taken place in the last 18 months that place a very important flag of opportunity in front of us. One is the passage of 1.2 trillion in infrastructure dollars for roads, bridges, water systems, airports, rail systems, and the abundant number of contracting opportunities that are going to exist for small‑ and medium‑size businesses, for Black businesses, and other businesses all across the nation really over a 10‑year horizon.

Number two, the CHIPS and Science Act, what just got passed, billions of dollars in both cash and tax incentives that will go to create, if you will, a chips business here in the United States. Well, I want to make sure that those companies‑‑and I shared this with the president in my meeting with him, that those companies that receive that very healthy dose of public subsidy are also going to pay attention to subcontracting opportunities and job opportunities for African Americans or we’re going to create a science divide. We’re going to take a powerful step forward to subsidize and to support something we need to do, but if we don’t do it in an inclusive way‑‑so that is a second, if you will, flag of opportunity.

The third flag of opportunity is the recently passed, if you will, climate bill, which has embedded within it a range of private‑sector, Charlie, tax incentives, cash supports, and some consumer‑side incentives, all designed to lessen our dependence on fossil fuels and to stand up a stronger renewables industry. With all of that public dollars, the dollars of all being injected into the future of the American economy, it is incumbent on the private sector and the public sector to have the will and the plan to make sure that we’re not going to create, if you will, a wider climate divide and a science divide and an infrastructure divide, where Black small businesses and small businesses are left behind.

The third flag of opportunity is that the infrastructure bill lifted the MBDA for the first time to a statutory agency and gave it more resources than ever before, and I’m proud that that agency is now led by Under Secretary Don Cravins who helped us get this star‑‑

MR. COWAN: We share your pride.

MR. MORIAL: ‑‑as our executive vice president. So that’s the next, if you will, flag of opportunity.

Here is an important public policy barrier that we have to confront, and I want to really raise this. Over the years, in the ’80s and the ’90s, those opposed to economic equity went into the Congress and passed what are called gross receipts and net‑worth caps placed on Black‑, brown‑, and women‑owned businesses who do business with the federal government. So the theory was you can participate in these disadvantaged business programs, but if you’re net worth gets to a certain level, if your gross receipts as a business get to a certain level, you’re no longer eligible to participate in these programs. These caps have never been updated, but the theory was that at some point, these businesses could compete in the economic mainstream. The evidence shows that the theory of the gross receipts cap and the net worth cap was flawed and failed.

So, in our work here‑‑and we’re having a discussion that sort of melds business and public policy‑‑we have to focus on the public policy barriers and the public policy opportunities, and along with that, if the private sector and the financial services sector works really hard to create both venture, risk, and debt capital for these businesses, we can truly make a difference because of these flags of opportunity. The money that’s going to be invested, the money that’s going to be spent, these sectors that are going to be enhanced in this country are very, very significant and important, and I don’t want us to miss this opportunity. And I don’t want us to miss the important steps that have already been taken in a short period of time by the Biden‑Harris administration and this Congress, but understand that these‑‑equity is not self‑executing because the systems were not designed for equity.

So we’ve got to hammer and push and change and transform, and I think that’s why this is such a timely and important conversation.

MR. COWAN: ‑‑Marc is talking about hammering and pushing policymakers, so two questions for you. One is we’re sitting here in Washington.

MR. COWAN: From your decades of experience, what would you say to policymakers they really need to do if they want to bring down these barriers? And then a question, I’m sure, a lot of people here and watching would like to know is, what is the secret to your success? Why have you become such a successful entrepreneur? So we’re going to move a little more quickly through these because we’re running low on time.

MR. COWAN: But let me put those two to you, and then I’ll get back to our other two panelists.

MS. JOHNSON: Well, first of all, as I said, I built a really strong network. I hired people that were smarter than me and that really understood my business.

MR. COWAN: That’s tough to do.

MS. JOHNSON: Yeah. And so many, especially women, it’s very hard for them to get started, but you have to swallow hard and understand where your limitations are, what are your passions, who are you really, to really build that network. And I had to really be very careful and was making sure that I brought the right people around me, because if you make that mistake, it’s bad.

I mean, someone went through $12 million of my money, and they were recommended to me. You got to be careful to build that network.

And there’s something I do want to talk about. Jason Wright and myself, we have been chairing a strategic partnership with Greater Washington, and we have raised $4.75 billion that is going to be‑‑

MS. JOHNSON: ‑‑given away over the next five years, and we’re really‑‑

MS. JOHNSON: We’re really focusing on women minority‑owned businesses because they are just really left out.

Now, the reason why I’ve been successful at what I’m doing, I really have a good business plan. I really knew exactly where I wanted to go, put the business plan together, shopped it to the most important people I wanted to hire. They share my vision. I check with them. They have respect for me. I also am very committed to diversity. So I make sure that as I’m building my business that I have Black, brown, women, and men working for me whom I trust because if you don’t have the people around you that really share your vision, it’s not going to work.

Also, the best financial people I could get around me who are going to watch every penny, every dollar. We make so many mistakes by not keeping our eye on the ball‑‑and a good lawyer.

MR. COWAN: Damn good advice.

MR. COWAN: So, Charlie, you talked about the‑‑kind of look back at the pandemic and what you learned through it. Look ahead now. So if you look out over the next few years, next half decade, what does the climate look like for small businesses? What are you worried about? What are you excited about? Just kind of give us a little bit of a tour of the horizon.

MR. SCHARF: And I’ll keep this short because I know we’re running low on time, and you want to get to Marc.

Marc used the word “divide” earlier today in several different respects, and I think what we see with consumers and what we see with small businesses is very, very similar. And there is a very, very big divide in the health of consumer and small businesses. Those that started very strong that have more wealth are doing really well, have plenty of resources. Their deposits are still as high as they’ve been. They’re spending. They’re building inventories if they’re small businesses, and they’re feeling actually very good about things, even though as they look out, they’re concerned. But they’ve got a real base to fall back on if there’s an issue.

When you look at those that went into the pandemic with less resources, many of which are minority‑owned businesses or minorities on the consumer side‑‑and we’re really starting to see them struggle. Their deposit balances are down substantially from what they were pre‑pandemic. They’re having to spend a lot more on food, fuel, the things that we’re all seeing in the inflationary environment. Their discretionary spend or their ability to invest as a business is much more limited than it was, and so, as we look at those things, one of the things that we’re trying to protect against is that we don’t help contribute to the self‑fulfilling prophecy of when people and businesses need you the most, you can’t walk away because you’re concerned about the credit.

MR. SCHARF: That’s what we‑‑that’s what got us into the problem that we’re into.

So I am‑‑so, you know, overall, I think, you know, things are very strong, but you need to look under the covers and say it’s strong for some, not as strong for others, and we all need to focus, which means proactively reaching out, where can we help people when we see the very beginnings of businesses or individuals getting in trouble, so that this racial equity gap that exists doesn’t widen.

MR. COWAN: Marc, we have about a minute left. We’ll give you the last word. What are you most worried and what are you most excited about, given the dynamics you just described?

MR. MORIAL: What I’m excited about is the spirit and the energy I see amongst young people who want to become self‑employed, who want to be entrepreneurs, who want to create for themselves, who have mastered the art of utilization of technology, culture, and opportunity. And there’s just an energy that is indefatigable that exists, and they see and feel the opportunity.

They need a boost. They need a nudge. They need technical assistance. They need to understand the various ways to secure access to capital, and we have to invest in them.

MR. MORIAL: You know, we have to really, really invest time. We have to invest talent. We have to invest treasure in them. That’s what makes me optimistic.

What makes me pessimistic is all the old bogus arguments, all of the yesterday thinking: Just hustle a little harder, just work a little longer, and, you know, it will work out. Pull yourselves up by your own bootstraps.

And the moment of George Floyd is a moment to understand, examine structural inequities and to change them and to alter them to create a more just and equitable economic future for the country.

So we have great opportunities at this moment, but we have to lean in and push. It’s a private‑sector imperative. It is a government imperative at every level. It is an imperative in the community. So those of us at the National Urban League who have been committed to economic equity and economic empowerment also see entrepreneurial growth as a way to create jobs, produce jobs, produce opportunity for people in the community.

So we’re going to all work together. I mean, I am powerfully optimistic but do not have a rose‑colored set of glasses on, and say to people let’s not engage in yesterday’s arguments, and let’s understand that some of the things like this gross‑receipts, net‑worth regime that has existed has to be dismantled for something fresh and new.

MR. COWAN: Brilliant. Well, I want to thank Sheila, Charlie, and Marc for an insightful, rich, and brilliant conversation. I’m sure everyone here and watching has the same feeling I do, which is 20 minutes is now nearly enough with the three of these folks, and we’d like quite a bit more time.

I also want to thank The Washington Post for putting together and hosting this important event on this crucial topic. For those of you who are interested, go to learn more about the Alliance for Entrepreneurial Equity. Go do

And, again, thank you all for being here, and thank The Washington Post. We’ll turn it over to The Post.

MS. CALDWELL: Good morning, everyone. I’m Leigh Ann Caldwell. I’m the coauthor of the Early 202 here at The Washington Post and also an anchor here at Washington Post Live.

As you all know, we have been talking a lot today about entrepreneurial equity, and so joining us today is SBA Administrator Isabella Casillas Guzman. Thank you so much for being here and spending your time with us. We have a‑‑

MS. GUZMAN: It’s a pleasure. It’s my favorite topic, so great to be here.

MS. CALDWELL: A lot of questions to get to.

So, first, I want to start with a little bit of news. The Consumer Price Index data came out today; inflation once again pretty high, 8.3 percent. What more can the administration do to tamp down on that inflation and especially when it comes to small businesses?

MS. GUZMAN: Mm‑hmm. Well, I mean, I think that in context, it’s important to remember that the American Rescue Plan really and SBA’s role in it in terms of getting relief to small businesses was really critical towards giving them a sound footing and to be able to survive some of the pandemic pressures in the marketplace, and obviously, now dealing with inflation and the tight labor market are the top concerns for our small businesses across the board.

The president has obviously, for some time, called inflation as the number one issue that we need to deal with to ensure that our economy can transition from this historic economic recovery with incredible job growth to a stable, sustainable growth, growing economy.

And, you know, the Inflation Reduction Act, of course, a signature legislative achievement of the president, is cornerstone in trying to make progress towards lowering those costs and investing in our supply chains. And throughout the administration, we’ve been trying to focus on shoring up our supply chains here domestically to try to help drive down inflation and the pressures of the covid‑disrupted marketplace across the world.

You know, I think that, obviously, working to support, you know, the Federal Reserve and their actions to try to ensure that they fight inflation is really key, but the efforts that are made to lower health costs, lower energy costs within the Inflation Reduction Act are‑‑were important first steps towards continuing to try to sustain this economy for especially our small businesses who are often hardest hit and don’t necessarily have that vendor relationship to negotiate and ensure their pricing to make their goods or delivery their services.

MS. CALDWELL: What are you hearing from small businesses, what their concerns are? Is it more about the tight labor market, that it’s still hard to find workers, or is it more about inflation?

MS. GUZMAN: It’s truly a mix, to be honest, even on the tight labor market issue. You’ll find small businesses who maybe were very adept at retaining their workforce, deploying strategies that enabled them to engender that loyalty, whether it was PPP funding to retain their workforce or otherwise, and have not experienced the same challenges in getting workforce, including in high‑impact industries like the restaurant industry. So it’s really been a diverse group of opinions.

I would say that I equally hear those two issues referenced, and the labor market because, clearly, small businesses are interested in growing, there is, you know, continued optimism among small businesses. They’re excited about the opportunities that present themselves, whether that’s contracting to build our infrastructure and the Infrastructure Investments and Jobs Act are being part of supply chain manufacturing and innovation investments, and the CHIPS and Science Act are more climate related on the Inflation Reduction Act.

So I’ve seen small businesses positioning for growth, and that’s the workforce issue is‑‑remains equally important for them.

MS. CALDWELL: Two and a half years after this pandemic started, what else do small businesses‑‑what challenges do they face to dig out of this pandemic, or how has the landscape changed for small businesses?

MS. GUZMAN: I think there have been a lot of key changes. You know, clearly, relief was really critical for them to survive, but it also gave them an opportunity to pivot and adapt and really think strategically.

There are opportunities on the horizon. Probably, the biggest trend that I see as a silver lining that we’ve leaned into at the SBA is the adoption of technology, and e‑commerce represents, you know, a huge opportunity for small businesses to grow their revenues. And it’s really about that. If those businesses with the strongest balance sheets are the ones that are surviving and looking towards the future and growth, they’re able to position themselves to sustain during this time. And so our goal is to really ensure that they can have strong balance sheets, and whether that’s through our affordable capital products to help them or through the revenue growth opportunities and the technical assistance that they need to really grow their revenues, in government contracting and exporting abroad and e‑commerce avenues or in their own marketplace.

MS. CALDWELL: Since the pandemic started through the Trump administration, The Washington Post just reported yesterday that, you know, the SBA’s oversight arm, the Inspector General, found that $13 billion of aid went overseas. So, you know, what is your response to that? What is the SBA trying to do to tamp down on that, and have you had any sort of broad accounting of how much fraud has taken place in these programs?

MS. GUZMAN: Unfortunately, there was a lot of cleanup that had to be done by the implementation in 2020 of these core programs, Paycheck Protection Program as well as the initial rounds of covid EIDL. Under President Biden, he was very committed to ensuring those funds got into the hands of the businesses they were intended to serve and really targeting the smallest of the small as well as those in underserves communities who were left out of early rounds, you know, Black and brown businesses that‑‑in particular that were not able to access at the same rates, the PPP program, in particular.

So, with that, obviously, you know, that was outreach for the equity perspective but also controls. You know, we have a different approach in implementing these programs and have a collaborative partnership with our Inspector General as well to ensure that we are putting in the right controls, the right technology to tamp down fraud and ensure that these funds are used for small businesses. So that initial analysis of the portfolio to determine how many IP addresses had foreign ties, you know, that was an initial assessment. We’re continuing to dig out of that data to work with the IG, the Department of Justice, and the Secret Service as they pursue these cases and determine the real picture of fraud in the end, which we don’t know at this point. But, clearly, those controls were put in place in early 2021, and we feel strongly about the fraud risk management that we’ve put in place at the SBA as a good measure to preventing fraudsters.

MS. CALDWELL: Do you think it will be more than $13 billion? Do you think the number could be much higher?

MS. GUZMAN: No. That’s an estimate, the total, potential. You know, there’s other reasons that that could have‑‑that estimate could have existed, but clearly, 2020, there was a lack of controls. Speed was the priority, and we focused on trying to ensure that in the future, technology and systems and processes are available to prevent that kind of execution.

Again, you know, I think that we’ve come a long way and will continue to make strides, and really, the impact of those programs has been profound. You know, there’s nearly $800 billion in PPP, you know, nearly a total of $1.2 trillion total, so nearly $400 billion in EIDL and the other high‑impact industries in relief funds. Those, you know, had a profound impact on making sure those small businesses could stay open. They were critical programs, and I think there’s, you know, no question of the ability for those to reach our small businesses, especially in 2021, where 96 percent of PPP went to the smallest of the small businesses and underserved, LMI, and rural areas.

MS. CALDWELL: Did the pandemic have a disproportionate impact on minority businesses?

MS. GUZMAN: Most definitely it did, based on multiple findings. In 2020, those‑‑from SBA’s perspective, those businesses oftentimes were the ones who did not get early relief from the SBA at the same rates and at the same dollar amounts in addition, but overall, you saw‑‑I was in Los Angeles at the time when it first hit. You saw early impacts in the Asian American community that was impacted by covid pandemic and perceptions of risk in those communities as well as businesses that had already preexisting barriers to capital, preexisting barriers to networks, which you needed as a small business to survive during the pandemic.

MS. CALDWELL: Well, that was exactly where I was going to go next, which is there are barriers to access to capital for small businesses and minority businesses in particular. So how do you tear down those barriers? What can be done, either through the Small Business Administration or the private sector?

MS. GUZMAN: Mm‑hmm. Well, SBA is one of the longest private‑sector partnership with public entities, I think, in federal government. We rely on our networks of lenders, our network of investors within our programs to ensure that we can get to yes for more small businesses to capital.

You know, I think that, you know, within‑‑obviously, one of the biggest challenges we saw during the relief and President Biden discussed this with me, the very first thing he discussed with me, was that it pained him that small businesses that didn’t have that accountant or that lawyer on speed dial were not able to get to relief programs initially. And so he wanted to make sure that we could empower all of our entrepreneurs with information and navigation to be able to access programs at the federal level, which was why we launched the Community Navigator Pilot Program.

Of course, the previous guest, the National Urban League, Marc Morial, is one of the Community Navigator’s grantees within our program. We’ve funded 51 hubs across the country and over 400 spokes who focus on underserved women, veterans, people of color, to try to make sure that we fill those knowledge gaps and those connection gaps. That’s first and foremost.

But there are learnings from the relief programs and how we can better reach our smallest of the small businesses. SBA had‑‑historically, obviously, our mission is to fill gaps in the marketplace, but we’ve seen a downward trend in small‑dollar lending. We’ve seen a drive towards more business acquisition and owner‑occupied real estate in our portfolio and less of those small 5‑ to $25,000 loans that you really want‑‑

MS. CALDWELL: Why is that?

MS. GUZMAN: ‑‑you know, to see happen.

Either there’s multiple reasons, but from PPP, obviously, that was a different situation altogether, 11 million‑‑over 11 million small businesses served, thanks to policies implemented, a lot of, during the Biden‑Harris administration, sole proprietors and other small entities. It was more representative of the true medium, you know, small‑‑or rather, micro, small, medium enterprises that SBA truly serves the full gamut of.

And so it’s speed to market, how quickly you can, you know, serve businesses with a capital product that is immediate, the distribution network that you deploy, and so with PPP, we had over 5,000 lenders working with us. Typically, it’s about 1,500. And then technology, being able to have an intuitive system for them to, you know, work through their lending‑‑you know, their lending presentation so that we can approve the loan as was the case with the direct lending program, EIDL. So we need to focus on that speed and focus on that broader distribution network and technology, and those are the investments that we’re making.

With Vice President Harris earlier this year, we announced the expansion of our Community Advantage Program, which is lending through mission‑focused lenders to underserved borrowers, those who are unbanked, underbanked, and represent a lot of those women and people of color who are unable to access capital. So we hope to see the changes in underwriting and eligibility and the expansion of the network pay off in terms of better serving our entrepreneurs with capital.

MS. CALDWELL: Relatedly, you’re kind of answering my next questions before I ask them, but Black, Indigenous, people of color entrepreneurs, you know, as you said, it’s harder for them to access capital. So through, let’s say, you know, VC firms, what are some nontraditional ways that people can access capital?

MS. GUZMAN: Well, I think it’s less known that SBA‑‑you know, we provide about $50 billion in capital products every year, and that not only includes our traditional lending portfolio, the 504 or 7(a) loans that banks and other lending institutions work with us on, our micro lending program, but also our small business investment companies. And so we power 300 licensed small business investment companies to provide, you know, capital to growth‑oriented small businesses, and we need to drive more on that risk capital, the venture, early‑stage capital within that program. It’s‑‑you know, it has over 37 billion total currently, privately managed through the SBA, and that’s a‑‑that’s an incredible impact in the community leveraging private capital with federal dollars to get a lot of debt products into the small businesses. But we want to see the venture side, and so we’re working hard to ensure that we can transform those programs to incentivize more risk and equity investments as well as broaden the emerging fund managers within our program to ensure that we’re reaching underserved populations, those operators who are seeking venture capital. I think that’s really key.

The private sector, especially in the venture space, is more diverse than the private equity space, where we tend to work within our SBIC program, and we want to make sure that we’re getting to those emerging fund managers within the venture space to put out our capital at the SBA.

MS. CALDWELL: Is it still‑‑is it still hard to open a small business? Is there still too many hoops to go through, and what can be done to make it easier?

MS. GUZMAN: Mm‑hmm. Well, amazingly‑‑and it’s through opportunity or necessity‑‑we’ve had historic rates of entrepreneurship during this time. Since January 2021, 7.8 million people have applied to start a business, and that’s a third higher than any other similar period on record. And so we’ve seen, you know, record numbers of people standing up, raising their hands, seeing opportunity or seeing necessity to create their own job and build wealth for their communities through entrepreneurship.

So I think, you know, it is still challenging, and I always tell small business owners, you need a team around you to support you, which is what the SBA does. We have a network of free advisors. We have great partners on the ground providing content for them to learn how to build a strong balance sheet, the revenues, you know, the strong management of operations and expenses.

MS. CALDWELL: So a question from the audience says, “The overwhelming majority of BIPOC businesses are solopreneurs. How do we provide technical support and access to capital to grow the number of employee‑owned firms?”

MS. GUZMAN: Employee‑owned firms meaning employee ownership?

MS. CALDWELL: So I am assuming this person means, you know, rather than a solo entrepreneur but just has people working for them so they can expand and get bigger.

MS. GUZMAN: Okay. Employer firms. Okay. Yes. We‑‑

MS. CALDWELL: Sorry if that’s not the right meaning, but that’s how I interpreted it.

MS. GUZMAN: I’ll do both of them a little bit.

MS. GUZMAN: Obviously, we want to make sure that more of our solopreneurs‑‑80 percent of small businesses are solopreneurs. We want to make sure they have a pathway to scale and have that growth mindset so that they can build wealth in communities and create jobs, and so empowering them with a strong strategic plan, which obviously that goes back to our networks. But working with, whether it’s National Urban League or our small business development centers, our women’s business centers, to build a strong plan for growth and ready yourself for capital so that you can get funding. Whether that’s a loan or investment vehicle, we want to make sure that small businesses are positioned and that they have a strategy to grow in the market. Whether that’s through exports or e‑commerce or government contracting or just expansion in local marketplaces, I think small businesses now more than ever have so many new opportunities to grow their businesses, and we want to make sure they’re tapped into those.

I think just in case they’re asking about employee ownership, you know, that’s something that’s an issue that’s really near and dear to Chairwoman Velázquez’s heart as the chair of the House Small Business Committee. That’s something the SBA is working on as well to ensure that employee‑owned companies can continue to thrive as that’s an opportunity to bring wealth to more communities.

MS. CALDWELL: Another audience question, this one from Jenny who asks, “What are some ways that investors can help increase and improve opportunities to create generational wealth for people of color?”

MS. GUZMAN: Well, I would say a couple things on that, and the first thing I want to touch on is government contracting. You know, it’s $560 billion marketplace, and as the president is really committed to ensuring that small businesses can access contracts and importantly that small disadvantaged businesses can access contracts, you know, we want to make sure that our entrepreneurs of color and that women, that veterans, all of our sole‑source programs can take advantage of government contracting opportunities to grow their businesses and create wealth.

Those programs, the president has assigned a 15 percent goal, growing from our current 10 percent level to 15 percent. It’s over $50 billion in contract opportunity for small disadvantaged businesses within our program. We think that that would go a long way towards helping seed these growth‑oriented companies as we have in the past through our 8(a) program and ensure that they can compete in this incredible marketplace.

But beyond that, you know, for small businesses who are interested in whether it’s government contracting or trade or what have you, leveling up your skill sets, leveling up your capital readiness is really important in ensuring that we have partners around us at the SBA who can believe in those entrepreneurs and operators and invest in them, and so the expansion of our distribution networks is really critical, I think, to ensuring that we can invest in communities, to narrow those opportunity gaps.

It’s as Marc Marial said earlier. It’s not about just working harder or anything of that nature. It really is truly making sure that there is investment capital or, you know, lending capital out there available for small businesses to grow, which they are going to need if they want to position their business for longevity, sustainability, and for building wealth.

MS. CALDWELL: You mentioned earlier about the large growth of small businesses coming out of the pandemic. Do you have a breakdown of how many of those are women businesses, people of color‑owned businesses? What’s‑‑

MS. GUZMAN: They continue to‑‑for the past 10 years, you know, women and minorities have been growing at the fastest rates. You know, for Latinos in particular, they’ve grown at 44 percent over the past 10 years versus 4 percent for all others. For the last 10 years, either Black or brown women have always been at the top rates in terms of entrepreneurship, and they continue. Some estimates is the majority of those firms are diverse, and so you see over‑indexing in ZIP codes and communities where Black entrepreneurs are typically situated. And so that’s‑‑you know, those are some of the datapoints, but we don’t have specific numbers yet. But I know that that’s been a trend that’s continued.

MS. CALDWELL: And are there any safeguards to ensure that women have equal access to capital as men?

MS. GUZMAN: Safeguards, no. There’s opportunity to improve programs, which is what the Biden‑Harris administration is really committed to doing. I think it takes, you know, transformational change within programs to ensure that we’re meeting businesses where they are. You know, women and people of color don’t necessarily come with a historic wealth creation in their families. You know, they can’t just get a loan from their friends and family or get investment from friends and family. So we want to make sure that our products are designed to support them, doing things like reducing collateral requirements within our Community Advantage Program from $25,000 up to $50,000. It goes a long way towards ensuring that we can bet on women and people of color and ensure that they’re getting the capital they need to grow.

MS. CALDWELL: And Eduardo from the audience asks‑‑Latinos, specifically Latinos, which you just mentioned are among the fastest growing segment of entrepreneurs. What can be done to maintain this momentum and elevate resources for them to succeed?

MS. GUZMAN: I do really believe, as President Biden believes, it’s about that connectivity to the knowhow, and the Community Navigator Pilot Program is a great example of expanding a network of advisors around the country to ensure inclusiveness, to ensure that we’re able to provide these emerging entrepreneurs with the success, the critical success tools that they need to succeed, and that capital readiness, the growth mindset, the ability to operationalize their growth plan and export abroad. And so I think that the more success outcomes we can have, the more models and mentors exist in communities to share and incentivize more growth.

MS. CALDWELL: Because it’s an election year, midterms are just a couple months away. How‑‑you know, can you talk about the view of Democrats a little bit in small businesses, how it compares to Republicans and‑‑or are they similar?

MS. GUZMAN: Well, fortunately, the small businesses are in communities who impact neighbors, who employ locally. You know, truly are‑‑is a bipartisan issue. I mean, I think that this is something that, you know, we know that all of our communities need entrepreneurship. It seeds growth. They’re the ones who create the products and services that we depend on every day. They innovate to solve global problems.

And I believe wholeheartedly that everyone increasingly under‑‑during the pandemic recognizes how important those small businesses are to our success and our economy, and as we see the face of entrepreneurship changing, recognizing that we need to invest in all of our entrepreneurs so that those great ideas can be built and succeed, I think that that has to be imperatively a bipartisan and uniform American ideal in order for us to be globally competitive and for us to succeed.

MS. CALDWELL: How long do you plan to stay on with the administration?

MS. GUZMAN: I have a lot of work at the SBA, and I’m really excited about what’s around the corner to ensuring that our capital products are readily available to all, and that our networks are strong and inclusive. So we have a lot of work, and I have a great team. And I am interested in supporting the president’s vision of equity to ensure that our economy works for everyone.

MS. CALDWELL: Great. We are out of time. Isabella Casillas Guzman, thank you so much for your time today. I really appreciate it.

MS. GUZMAN: Thank you. Thank you so much.

MS. CALDWELL: And our other guest, Theresia, was unable to join today. Last minute, she had an emergency. So we apologize for that.

But thank you all for coming. You can go to to get the transcript or to rewatch this program. Thanks so much.